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CHINA: China union says U.S. fast food chains broke wage law

by John RuwitchReuters
April 4th, 2007

U.S. fast food chains, including McDonald's and KFC, broke minimum wage laws in the southern Chinese city of Guangzhou, the state-backed labor union said on Wednesday, urging tougher enforcement of employment laws.

Guangzhou set the minimum wage for part-time workers at 7.5 yuan ($0.97) an hour at the start of this year, but outlets of McDonald's (MCD.N: Quote, Profile, Research), and KFC and Pizza Hut, which are part of Yum Brands Inc (YUM.N: Quote, Profile, Research), paid workers less than that, said Li Shouzhen of the All-China Federation of Trade Unions.

"This conduct violates the relevant rules of our nation's labor law," said Li, head of the union's Social Security Work Department, according to a report in the official People's Daily.

A Yum spokeswoman said the company had followed Chinese laws. It was awaiting the results of an investigation into the companies' wage practice by the Guangdong province labor bureau.

McDonald's head of government relations in China said they were working with officials to investigate the salary issues, but the firm had not been in touch with the union. It has said it follows relevant laws and regulations.

The People's Daily article did not say what evidence Li based his comments on, but the All-China Federation of Trade Unions -- China's only union -- is not independent and functions much like an arm of the government or Communist Party.

Workers at McDonald's and KFC in Guangzhou confirmed reports by a local newspaper last week that many workers were receiving less than the minimum wage, particularly university students working part time without contracts.

One 22-year-old college student, who spoke to Reuters on condition that his name not be used, said he had worked at McDonald's for six months and earns 5.3 yuan ($0.69) an hour.

Another woman who said she had recently graduated from college but had worked at KFC for the past couple of years said she still made less than 7.5 yuan. She also declined to be named.

The workers said they were not alone. Between 75 and 90 percent of colleagues at their restaurants, each with 40-50 workers, also made below the legal minimum, they estimated.

The story, originally confined to Guangdong province, where there are 231 McDonald's restaurants and 330 KFCs and Pizza Huts, according to the companies, snowballed earlier this week when reports accused the companies of underpaying workers in several other cities around the country, including Beijing and Shanghai.

Within days, authorities had launched an investigation, which some political observers said reflected a new willingness to challenge business practices of multinational corporations.

Fu Minrong, a Shanghai lawyer and former journalist who follows such issues, said that until recently employees' rights might have been overlooked in the interest of foreign investment.

"In the past, we perhaps gave too much consideration to the investment interests of multinationals in China, so there were very few open reports about them," he said.

The spate of reports now "reflects the amount of openness there is in terms of media freedom in China," he added.

They also highlight a focus from Beijing on equality and the alleviation of potentially destabilizing factors, said Liu Cheng, a member of the Faculty of Law and Politics and Shanghai Teacher's University.
"Livelihood problems in China are at a point now where they must be resolved," he said. "These reports fit into such a policy environment."



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